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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22704
Experience:  Taxes, Immigration, Labor Relations
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Filing I-407 and 8854 with back dates

Resolved Question:

I have a green card since 2003. I left the us in 2004 permanently. Since then I have been back only occasionally with the last time entered in 2009. I filed taxes until 2009 then stopped. What date should I use now when filing I-407 and 8854 forms. I had little to no income in 2009, less than 100k in 2010 and more than 150k in 2011, 2012 and 2013. So since I have not been in the us since 2009 I plan to file I-407 now but with a 2009 back date( is that possible). Then the big question is: I will file 8854 immediately after that so will I owe taxes on my income (which is derived solely outside the us) between 2009 and 2013. And one more last thing to clarify - the exit expatriate tax for the last 5years talks about average tax liability of circa 151k per year NOT income correct? Thank you
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

LEV :

Hi and welcome to Just Answer!
You do need to file all tax returns for years you would be considered a resident alien based on the green card - - you need to use form 1040 for your tax return
In additional - because you are living abroad - you might be eligible for the foreign earned income exclusion.


For the person to qualify for the foreign earned income exclusion - he/she should:
-- Work and reside outside the United States for at least 330 days during the year(Physical Presence test), or
-- Meet either the Bona Fide test.
If the person qualifies, he/she may exclude up to $92,900 (2011) in foreign wages. The amount of foreign earned income exclusion fro 2012 is $95,100.


Exclusion is not granted - to receive that exclusion - the taxpayer should file the tax return and attach the form 2555.


Please be aware that - the exclusion above will not affect self-employment taxes - only income taxes. Only earned income is excludable - income from wages and self-employment. For instance - dividends, investment income, rental income, pensions, etc - are not excludable.
If the same income is taxable abroad and in the US - you may claim a credit for taxes paid abroad - so the same income would not be taxed twice. Use the form 1116 - http://www.irs.gov/pub/irs-pdf/f1116.pdf please find instructions here - http://www.irs.gov/pub/irs-pdf/f1116.pdf
The credit is limited by the US tax liability on the same income - the form 1116 is used to calculate the amount of credit. Means - if tax liability abroad is higher - there will not be US taxes on that income, but if tax liability abroad is lower - in the US you will pay the difference after the credit will be applied.

LEV :

So - it is possible that your US tax liability will not be as much if any.

LEV :

Among the various new requirements contained in IRC 877 and 877A, individuals that renounced their US citizenship or terminated their long-term resident status for tax purposes after June 3, 2004 are required to certify to the IRS that they have satisfied all federal tax requirements for the 5 years prior to expatriation. If all federal tax requirements have not been satisfied for the 5 years prior to expatriation, even if the individual does not meet the monetary thresholds in IRC 877 or 877A, the individual will be subject to the IRC 877 and 877A expatriation tax provisions.

LEV :

$151,000 that mentioned on the form 8854 - means income tax liability - the amount of taxes paid - not taxable income.
Let me know if you need any help.

Customer: Lev thank for your answer. It does not quite adress the precise detail of my question which is:
Customer: If i file i-407 on lets say 15 feb 2013 and put in question 6 that i choose the date to terminate my green card status in nov 2009 as the date when i last left the united states, does that mean that taxes for the period between nov 2009 and feb 2013 will be due. Also if i receive a large payment after my date of submission of my i 407 in feb 2013 will the us try to tax that as well. It does say on some 8854 instructions that the final date taxes are due is the earlier of giving up your green card but it doesnt say a back date can not be used if it can be proven that one has not been in the US ever since. Please clarify as that is the gist of my question. Many thanks
LEV :

If you choose the date of termination of your permanent resident status as Nov 2009 - and that date will be approved by immigration authorities - you would not be considered as having green card after that date - and as such will be treated as a nonresident alien for tax purposes..
As a nonresident alien - you would be taxed only on income from US sources (not on all your worldwide income as resident aliens).
Thus - if that date would be accepted - your income from sources outside of the US would not be classified as taxable for US income tax purposes.

Customer: Lev thank you for your clarification. That now addresses the exact question i had. The result hinges on how the immigration authorities and tax authorities decide to treat my status after my last departure from the country. Let me know besides rating your answers whether there is anything additional i need to do in order for the payment to be sent over to you. Best regards
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22704
Experience: Taxes, Immigration, Labor Relations
Lev and 2 other Tax Specialists are ready to help you

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